As a new school year approaches, students are considering what classes they need to take and how much the classes will cost. Whether it’s a community college, a trade school, a four-year university, or an advanced degree, higher education is expensive. The good news is tax credits can help offset these costs.
These credits reduce the amount of tax someone owes. If the credit reduces the tax to less than zero, the taxpayer could even receive a refund, according to a news release.
Taxpayers who pay for higher education in 2021 can see these tax savings when they file their tax returns next year. If taxpayers, their spouses, or their dependents take post-high school coursework, they may be eligible for a tax benefit.
There are two credits available to help taxpayers save money on higher education, the American opportunity tax credit, and the lifetime learning credit. Taxpayers use Form 8863, Education Credits, to claim the credits.
Here are some important things taxpayers should know about these credits.
The American Opportunity Tax Credit Is:
- Worth a maximum benefit of up to $2,500 per eligible student.
- Only for the first four years at an eligible college or vocational school.
- For students pursuing a degree or other recognized education credential.
- Partially refundable. People could get up to $1,000 back.
The Lifetime Learning Credit Is:
- Worth a maximum benefit of up to $2,000 per tax return, per year, no matter how many students qualify.
- Available for all years of postsecondary education and for courses to acquire or improve job skills.
- Available for an unlimited number of tax years.
To be eligible to claim either of these credits, a taxpayer or a dependent must have received a Form 1098-T from an eligible educational institution. There are exceptions for some students.
Taxpayers can use the Interactive Tax Assistant tool on IRS.gov to find out if they’re eligible for these credits.
Info about Multilingual Advance Child Tax Credits Resources
Among other multilingual advanced child tax credit resources, the IRS now has a Spanish-language version of its Child Tax Credit Eligibility Assistant. This tool helps families determine whether they qualify for the child tax credit and the special monthly advance payments of the credit. By answering a series of questions about themselves and their family members, a parent or other family member can quickly determine whether they qualify for the credit.
This tool may be particularly useful to families who don’t normally file a federal tax return and have not yet filed a 2019 or 2020 tax return. Often, these are people who receive little or no income, including those experiencing homelessness, low-income households, and other underserved groups. This tool can help them decide whether they should take the next step and register for the advance child tax credit payments.
The Child Tax Credit Eligibility Assistant does not request any personally identifiable information for any family member. For this reason, its results are not an official IRS determination. The results are reliable, though people should consider the results preliminary, even if all their answers are accurate. The IRS does not keep the answers the user supplies, or the tool’s results.
To help people understand and receive advance payments of the child tax credit, the IRS has developed materials in several languages. All tools are posted on the Advance Child Tax Credit 2021 page on IRS.gov.
Multilingual resources available on the 2021 Child Tax Credit and Advance Child Tax Credit Payments: Resources and Guidance page include:
- A step-by-step guide to using the Non-filer Sign-up Tool in Spanish, Chinese Simplified, Korean, Vietnamese, Haitian Creole, and Russian.
- A basic YouTube video on the Advance Child Tax Credit in Spanish and Chinese, as well as English.
- Several e-posters in various languages.
Non-filer Sign-Up Tool
The online Non-filer Sign-up Tool helps eligible families who don’t normally file tax returns register for the monthly advance child tax credit payments. It offers a free and easy way for eligible people who don’t normally have to file taxes to provide the IRS the basic information needed – name, address, and Social Security numbers – to figure and issue Advance Child Tax Credit Payments.
This tool also helps eligible individuals who don’t normally file tax returns register for the $1,400 third round of Economic Impact Payments, also known as stimulus checks, and claim the recovery rebate credit for any amount of the first two rounds of Economic Impact Payments they may have missed.
Beware of Scams
The IRS urges everyone to be on the lookout for scams related to both Advance Child Tax Credit Payments and Economic Impact Payments. Scammers often target non-English speakers and underserved communities. The IRS reminds all taxpayers that the only way to get either of these benefits is by filing a tax return with the IRS or registering online through the Non-filer Sign-up Tool on IRS.gov. Any other option is a scam.
People should watch out for scams using email, phone calls, or texts related to the payments. The IRS never sends unsolicited electronic communications asking anyone to open attachments or visit a non-governmental website.